Davos: Trade disruption and domestic innovation dominate

Global discussions at the World Economic Forum in Davos are now prioritizing trade disruptions and the imperative for domestic innovation, according to Essar Capital Director Prashant Ruia. He observed a significant departure from previous years, with a sharp focus on the risks associated with diverging international trade policies.

Ruia explained that the established global trade order, once championed by frameworks like the WTO, is fragmenting. Countries are increasingly favoring bilateral trade arrangements, a trend partly fueled by Western economies seeking to retain manufacturing jobs and protect industries from cheaper imports.

He further articulated the challenge faced by Western economies in balancing open borders with domestic manufacturing preservation. The higher costs of production in these regions necessitate a degree of protectionism, making the battle to retain manufacturing a winning one.

On energy, Ruia advocated for realism, cautioning against unrealistic timelines for transitioning away from fossil fuels. He stressed that renewable energy expansion should align with economic viability, citing India's progress as an example. Essar Capital is exploring options like electric and LNG trucks, emphasizing customer willingness to adopt cleaner options if costs are comparable.

Ruia identified India's primary long-term challenge as a deficiency in robust domestic research and development. He called for a concerted effort, involving government support and private investment, to foster an innovation ecosystem. India's success in low-cost space technology serves as a precedent for what can be achieved.

Looking ahead, Essar Capital remains invested in energy, metals, infrastructure, and technology across India, the US, and the UK. Ruia expressed optimism regarding India's growth prospects, citing favorable demographics, stable policies, strong entrepreneurship, and sound fiscal management.